US should deny property waiver


If the Obama Administration is serious about promoting democracy in Nicaragua, it can emphatically do so later this month when it decides whether to grant a property waiver to President Daniel Ortega’s corrupt and authoritarian government.

If it opts to withhold the waiver, it will compel the U.S. to oppose Nicaragua’s loan applications at the Inter-American Development Bank, International Monetary Fund, and World Bank. This could cost Nicaragua millions of dollars in grants and concessionary loans.

Confiscation of Property

The waiver is mandated by legislation that requires countries that have confiscated properties belonging to American citizens to compensate those citizens. Any failure to do so, in the judgment of the State Department, may result in the waiver being denied. Nicaragua has secured waivers over the past two decades.

The confiscations occurred largely during the 1980s, when Daniel Ortega and the Sandinista government adopted disastrous Marxist policies and applied them to a fragile agrarian economy. Beginning with property owned by the Somoza family, confiscations quickly spread to lands and houses of anyone opposing the regime. As more middle-class Nicaraguans fled abroad, the Sandinistas helped themselves to the property that was left behind, ostensibly to benefit their social programs. In 1990, following electoral defeat, Ortega and the Sandinistas went on a rampage of confiscations—known as the “Piñata”—by occupying expensive houses and ranches as well as seizing banks and businesses for personal enrichment.

It fell to the opposition governments that defeated Ortega and the Sandinistas in three consecutive elections to undertake compensation. Between 1990 and 2008, the Nicaraguan government paid over $430 million in compensation to some 1,600 American claimants. There are still around 200 American citizens claiming restitution. In the current waiver period, the Nicaraguan government has settled some 50–55 claims, about the average of the past several years.

Based solely on this figure, Nicaragua might well earn yet another waiver, but there are other factors to consider as well. For example, land invasions—including at least 10 that involve property belonging to Americans—have become more frequent, and the Ortega government has done nothing to prevent or reverse them.

Pros and Cons of Denying the Waiver

Is the waiver, as the legislation stipulates, in America’s “national interest”?

That is a fair question and difficult to answer. If the U.S. denies the waiver, it may undermine its leverage to compel the Sandinistas to compensate those who still have outstanding property claims. It may also provoke Ortega into expelling the Agency for International Development mission, thus depriving civil society, small businesses, and other worthy recipients of U.S. assistance. And, most important, if Nicaragua can no longer secure loans through the international lending institutions, it will have a deleterious effect on the economy with obvious consequences for the poor and the middle class.

But by denying the waiver, the U.S. might help to restrain, if not reverse, Nicaragua’s steady slide toward one-man rule and force Ortega to spend more of the half-billion dollars he receives each year from Venezuela on the social programs he endlessly touts. It might also encourage the people to demand government transparency and accountability (both sadly lacking) and prompt the private sector to put pressure on the Sandinistas to respect basic democratic norms. At the same time, it would speak—as no mere rhetoric ever could—of the Obama Administration’s serious commitment to defending representative democracy.

Corrupt Regime

Essentially, it comes to this: Is Ortega’s misconduct in office sufficiently grave to justify these harsh measures? Would the Nicaraguan people ultimately benefit—economically, socially, and politically—from this action? The answer to both questions is yes.

After winning the presidency in 2006 against a divided opposition, Ortega proceeded to steal the municipal elections of 2008 and manipulate the results of national elections in 2011. He has repeatedly abused or disregarded the constitution, allowed over 30 high officials to remain in office after their terms have expired, co-opted much of the political opposition, harassed civil society, and made a mockery of the separation of powers and rule of law.

Using money from Hugo Chavez’s Venezuela, he has purchased most of the independent media to mute criticism and has tried, with mixed success, to intimidate others into silence. He has placed his children in positions of authority. He and his cronies have grown rich through their web of influence peddling, ill-gotten businesses, and access to Chavez’s money. In short, he has fashioned a nepotistic, corrupt regime. And all the while, he has never wavered in his support for Bashar al-Assad in Syria, Mahmoud Ahmadinejad in Iran, the Castro brothers in Cuba, and, until his death, Muammar Qadhafi in Libya.

Although Ortega has made life marginally better for the poorest Nicaraguans and has maintained prudent macroeconomic policies that benefit the middle and upper classes, he has done so at enormous cost to the country’s social fabric and political integrity. Society is once more polarized. The Supreme Court and the Supreme Electoral Council, two co-equal branches of government, are hand puppets for the Sandinista Party, which also holds a supermajority in the legislature. And despite enjoying every electoral advantage, including money, Ortega persists in stealing elections and manipulating their results.

Ortega is intent on creating a version of the Somoza dictatorship of decades past. His influence already reaches deeply into government, commerce, defense, the media, and culture. If left unchecked, he will transform Nicaragua into his personal fief and then bequeath it to his children.

Leveraging Democracy

Smart and well-intentioned Nicaraguans have argued that the U.S. should grant the waiver and let them sort through their domestic problems. However, these same Nicaraguans have been unable to unite in the last two national elections, continue to bicker among themselves, and give no evidence of being able to coalesce around a person, plan, or idea.
The Obama Administration should:

1. Refuse to renew the present property waiver. As with the recent refusal to grant a transparency waiver, the Obama Administration should now employ its largest “stick” against Ortega in order to leverage greater democracy.

2. Specify preconditions for renewal. Ortega and company must be prepared to end land invasions, continue to compensate the victims of property confiscations, and restore independence to the courts and electoral council. If they do this, the U.S. should consider reissuing the waiver in a year’s time.

3. Support free and fair municipal elections. The November 2012 municipal elections offer a major litmus test for a potential democratic recovery. They must be conducted in a transparent and accountable fashion with active civil society participation and a reformed Supreme Electoral Council.

4. Conduct a public diplomacy campaign. Clearly demonstrate that the U.S. took the decision on the waiver because of the misdeeds of the Ortega regime and with a view to the long-term interests of all Nicaraguans.

Needed Impetus

America’s denial of the property waiver might be the impetus Nicaragua’s democratic opposition needs to put aside their differences and work together to reestablish accountability, transparency, and rule of law in their country. It might also serve as a wake-up call to President Ortega and the Sandinistas and slow Nicaragua’s inexorable slide toward authoritarianism.

Ambassador Robert J. Callahan is a retired career foreign service officer who served as the U.S. ambassador to Nicaragua from 2008 to 2011.

Ray Walser, PhD, is Senior Policy Analyst for Latin America in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.

This opinion article was first published by The Heritage Foundation and is reprinted here with permission.

  • Oscar Quintana

    With all due respect to the opinion of ex-Ambassador Callahan. I think the United States should approve the waiver. You must remember that the International Court back in the 80’s ruled that the United States had to pay what in these days would amount to some 50 billion U.S. dollars. If Nicaragua were to receive that payment it would have enough money to pay all the land confiscated to U.S. Citizens and Nicaragua would have enough money left to build a 30 billion dollar Nicaragua Canal. So I think it would be cheaper for the United States to just approve the property waiver.
    God bless America Mr. Ambassador

    • carlos

      leave that dream alone, that debt was condoned and can’t be reversed. it is non-sense to keep bringing up that debt. WHy don’t you tell Ortega instead to clean up his act?

    • Oscar Quintana

      Exactly Carlos. The “war debt” was “condoned” by Mrs. Violeta Chamorro. But the moral debt is still there. The US owes the Nicaraguan people a lot. It should continue to help the people. I thanked what the US did with the Millennium projects. It was a job well done. It should have never pulled them out. That work is very good for Nicaraguans. The new road to Poneloya and other roads and assistance to farmers are still a blessing.
      The US should continue working with the Nicaraguan people and the Government of Nicaragua led by President Ortega. It should offer honey instead of vinegar and have a century of patience. It will be better for the people of Nicaragua and the United States in the long run. No government is perfect. Only our God Almighty!

      • Aldo Gutierrez

        Good luck with that! Not even Ortega has the balls to make them pay!

      • Flex

        *(“But the moral debt is still there.”)*
        Very true Oscar,
        That is why the US is paying the $50 billions in “MORALITY” (Ortega needs some of it !! )

  • Israel

    Americans, go Home

  • Manuel Alvarez

    Al sabio con señas, y al bruto con leño. Que saben los sandías de números, de estadísticas; si buscamos en las escuelas a los malos estudiantes son las crías de f$ln de la FES y en las universidades son los de UNEN.Para elegir un presidente debemos fijarnos en su escolaridad, en su capacidad, en su actitud, en su aptitud, en su sabiduria, etc. El maje del carmen gobierna con el chipote chillón, gobierna como marioneta, el mono de Venezuela le mueve los hilos. Y hace solo 35 años o menos eran tan solo unos vulgares asalta-bancos y asesinos de Guardias Nacionales. Definitivamente en Nicaragua los delicuentes son los que mandan. Me da risa, cuando esos mismos delicuentes hablan del crimen organizado; son tan descarados que hasta se señalan ellos mismos. Pobre pais y más pobre la gente, que no tiene ningún futuro, ni esperanza de que algún dia la vida sea diferente para ellos. Bienaventurados los que pudierón salir de ese infierno. Alaben a Dios.El plan de somo…digo ortega es ahuevo me tienen que querer estos indios nicaraguenses, a punta de purisimas,laminas de zinc,huezos en el go bierno, juegos de futbol del Real Madrid y el barza,y de Cuba en beisbol,a puntas de politicos corruptos y comprados,con una dosis intoxicante de noticias positivas de la funcion tiranica rosada-chicha,como decia el nazi encargado de las masa-informacion, no parecido a la chamuca??tantas veces hasta q sea verdad..a zombizar a la juventud Y A LOS SERVILES!

  • Darrell Bushnell

    In my humble opinion, the major reason to use diplomacy on both sides instead of making threats is that for all of its warts, Nicaragua is doing quite well. As we watch Mexico, Guatemala and Honduras slide into the chaos of crime and ineffective government practices, Nicaragua remains a beacon of hope. The states can use as many friends as it can find in its own hemisphere.

    Yes, Nicaragua has a lot of problems but threats will only drive the country to seek assistance elsewhere and creates ill will. Cutting off aid hurts the people, not the leaders. Is diplomacy a lost art?

    • GringoLoco

      “Los yanquis, enemigos de humanidad” — F$LN “national” anthem

      You might want to google all the anti-imperialist rants of Whoretega over the last five years. You also might want to consider his unconditional support of such fine “democratic leaders” as Fidel, Qaddafi (hope he’s still burning), Assad, et al.

    • Rodrigo Monjarrez

      The facts are: That the waiver represent less than 3 million dollar as supposed “a reward” for property transparency management on the Nicaraguan fiscal year. This amount is totally non relevant and most insignificant to the country’s national budget, let not forget, Nicaragua as reached record products exports exceeding two thousand millions and the highest Gross Domestic Product, records because never gained by any previous administration.

  • Ken

    There are so many lies and half-truths is this article that a critique would be longer than the original article. Suffice to say that it is good for all to see exactly how ideological and mean-spirited some in the US are.

    My preference would be for the US to cut all funding, just so that Nicaragua doesn’t have to be beholden to these meddlers (the little bit of money the US provides isn’t worth it), but I see that the meddlers aren’t content to cut of US money but also want to block Nicaragua’s access to loans from other sources. What creeps. If the US doesn’t want to give money, fine, but by what right does the superpower then threaten to oppose Nicaragua’s access to non-US loans? God, you can’t get rid of the damn yanquis.

    • GringoLoco

      If the US doesn’t want to give money, fine, but by what right does the superpower then threaten to oppose Nicaragua’s access to non-US loans?

      Gee, just maybe it because the USA provides the highest proportion of the capital that funds these loans?

  • roberto

    All US funding should be stopped immediately to Nicaragua as the Sandinistas are taking over the country and leaving it in ruins. My uncle had his land confiscated by the Sandinistas!!

  • Aldo Gutierrez

    Thank You Mr. Callahan. Nicaragua loves you!

  • http://no Damian

    Nicaragua is doing well and does protect investments. My property rights are protected. The country feels safe especially in relation to the region. It is definitely not a dictatorship. This article is full of disinformation and making the USA look like the unconditional world friend…. Reality is different and Nicaragua is in its right to act as it wants. We keep on talking about Ortega but lets not forget that even if the fraudulent votes are not counted Ortega still wins with a majority! The people have chosen indeed but that does not seem to count. If the USA is serious about democracy it seriously needs to change it’s strategy and treat it’s neighbours with respect. What really changes peoples lives are the economy – And the USA needs to decide to grow through friendship and cooperation or by “obvious/subtle” force.

    The IMF and World bank are not independent from US politics while they should!

  • Roberto

    Robert Callahan, the recently retired United States Ambassador to Nicaragua, has come out against the granting of a waiver to Nicaragua for its past transgressions of confiscating land from U.S. citizens. However, if you look at the data this makes no sense at all.
    To begin with, Nicaragua has consistently made progress in paying off the debts incurred after the seizure of property following the defeat of the dictator Somoza in 1979. They have repaid over $1.5 billion. During the last 2 years, the repayment has been equal to, or better than expected. So why deny this small country the waiver it deserves?
    The United States, a super power of 300 million people and a gross national product of $14 trillion dollars, may possibly pull the rug out of this small, but growing economy of a country of 6 million people and a GDP of $17 billion. Nicaragua is the poorest country in Central America, and the second poorest country in all of the Americas, behind Haiti.
    Last month, the Nicaraguan business community went to Washington and told them that this would be a “nuclear bomb” to the development of their business community and the people of Nicaragua. This is the middle class of Nicaragua speaking.
    However, not only is it possible that the U.S. may not grant development money from the U.S., but they are going to demand that the IMF and the development banks of Central America not grant any loans. The U.S. has a “veto” on these loans. So, the fact is in the next year, not just $2-3 million is going to be held back, but $350 million in loans and grants!
    The United States cannot treat this country as a political trophy, or a way to look tough in order to get elected in November. With this kind of policy it is not surprising that Iran, Venezuela and Russia are seen as friends of Nicaragua. With “friends” like the United States, who needs enemies?

  • Nicagringo

    Remember that authoritarian rulers gain and maintain control by several means, the Army, money (ala oil), or popular support.

    Ortega has control because he is doing a great job and will maintain control as long as he does a good job. Do we really want a US style democracy where everybody is shouting from the right and left and nothing gets done? The US has lost its way and it is pathetic that it still tries to influence the progress other countries with silly value judgments.

    How was Ronald Reagan able to wage an illegal war against Nicaragua against the wishes of a democratically elected congress and not go to jail? Because he was popular…lets quit with the value judgments of Ortega and start looking at the good he is doing.

    • Flex

      If Reagan wanted a war against Nicaragua ( we will not be talking about Ortega now). ….. All Reagan did was send Oliver North and some aid to help the “Contras” whom realize that Ortega was going to be what he is now. & about; **(value judgments of Ortega and start looking at the good he is doing.)** What about the mortgage that we are inheriting for the next 20 years with Venezuela ??.
      All Callaham is saying is; the “No” waiver will show the “real” Ortega to the people and he will have to use the Venezuela’s loan$ for Nicaragua’s needs instead of spending the $$ to enrich his family (he will end up “rich” exactly like Libya’s Qadafi)

  • occasional visitor

    If Hugo wants a puppet state, he will ultimately have to support it himself. Is he that generous?

    Maybe it would be for the long-term good. One of the things that helped crash the Soviet Union is when the people relaized their goverment was committing them to permanently support an ever increasing list of failed nations like Angola and Nicaragua.

  • jim miller

    Ortega respects the Nicaraguan constitution about as much as George Bush did when he was in office, but this doesn’t make either of them dictators. Nicaraguan democracy is very similar to US democracy where Republicans and Democrats will use any law or power availbable to them (many of them illegal and unconstitutional) to try and win elections (if you remember in our democracy people have been denied the right to vote if they couldn’t read or wright, if their skin color was darker, etc). Callahan is an old government cronie who still hasn’t got over his days leading the contra war. Leave Nicaragua alone you old coot, go retire and quit spreading rhetorical lies even when you are no longer being paid to (or are you getting checks from some right wing think tank now). Leave Nica’s and Americans living in nicaragua (like me) in peace.

  • NicSandal (NicaCaitudo)

    There are two aspects to this matter; the legal, and the moral.

    Legally speaking the waiver should not be granted because it is in violation of the third most important principles to the founding fathers: remember, Life, Liberty and Right to Property.

    Morally; is there a justification on denying poor Nicaraguans any source to better their lives? I think not.

    But I think that a conditioned waiver could be a middle ground and allow America to have the best of these two alternatives.